Grenadier Chocolate Company

GRENADIERCHOCOLAT

ECOMPANYLIMITED

Group 3

INTRODUCTION

Mr. Ronald Begg is an ex-employee of :P&G – brand managerFrito Lay – National Sales Manager

He now wanted to start his own company and after several trials and thought process and looking at available finance the eventual choice was a new, milk modifying, instant chocolate syrup for household use.

The product was given the name MilkMate.

SYNOPSIS

Chocolate is the dominant flavour, estimated to account for about 80% of total sales.

The competition powdered Milk Modifiers had low solubility, were difficult to mix, and often left a residue in the glass after drinking

The new liquid form of product – dissolves instantly & completely

Market researches on Milk Mate gave positive results which gave Mr. Begg encouragement to go for the product

Nestle

50%

Hershey20%

Cadbury10%

Other Small Regional Brands

20%

CURRENT MARKET SHARE

Pricing and positioning strategies were worked out keeping in mind the competitors

Investment and working capital figures were chalked out and banks gave a nod provided the viability of product as well as business was there.

Mr. Begg wanted to find a space here where he could combine a small scale product with multi-national marketing techniques.

The biggest catch was that big multinationals could manage huge brands but not small ones , Canadian companies could manage small brands, but are reluctant to invest in marketing and promotion support programs.

SYNOPSIS

To master a particular market requires experience & additional learning

Broaden to Generic Mktg

concept

Mktg Mgmt

Formulate Problem

MR

Determine Research

Design

Design Data Collection

Competition

Offering

Markets/Publics

Diffussion, Adoption & Innovation

Corporate Strategy

&allocation

Strategic marketing Planning

Configuration (Product)Facilitation (Distribution/place)

Valuation (Price)Symbolisation(Promotion)

Durables

FMCG

B2B

Govt Mktg

Retail

International Mktg

Rural Mktg

Social Mktg

Exchange

COMPETITION OF MILKMATE

Which brand?

Milk Mate Powder

Liquid

What from of milk modifier do I go for?

How do I want my milk?

What desire do I want to satisfy?

HoneySugarPlain milkTeaCoffee

Milk Modifier

Coconut WaterJuice

Milk

EnterpriseCompetitors

FormCompetitors

GenericCompetit

ors

DesireCompetitors

SEVEN DECIDING CRITERIA

Market Penetration Vs Market Skimming

Selling Price

Trade Margins

Advertising and Promotion

Supply Chain : Retail Distribution

Company salesmen Vs Sales Agents

Regional distribution Vs National Distribution

MODIFYING A HABIT

Form of existing product: Powder

Form of new product: Liquid

Methods to bring about the change in consumer mindset:Produce a relevant benefitLiquid that dissolves instantlyNo need of refrigeration

MARKETING MIX

Product: Suits the market and comprehensive testing was carried out to come down to final formulation.

Price : Market leaders were making losses ($1) per case because of rise of prices of sugar, essential ingredient in the product.

Advantage to companyCost of ingredients, packaging, manufacturing, distribution lower than competitionLess Raw Material (Sugar) requirement: reduced costCost reduction of 10 – 20 %

Distribution

Company salesman v/s Salesman on commission

Salesman commission : 3 to 10 %

Retailers Expectations : 20 % Margin ( margin given by existing players 18 %)

Communication

Focus on ONTARIO and QUBEC

Efficient advertising: Advertisements on 16 Channels

Promotion: Cents-off coupons

Constraints

Limited resources

Entire dependence banks for funding

MARKETING MIX

PROJECTED MARKET SHARE

Total Market Size : 23 million poundsPer pound revenue: 0.99$

Total market (units million

pounds)

Expected market

share (%)

Expected market(units million

pounds)

Revenue (Million

$)

25.30 15 3.79 3.75

27.83 25 6.95 6.88

30.61 35 10.71 10.60

33.67 45 15.15 15

37.03 50 18.51 18.32

Total 55.31 54.76

PROGRAM OFADVERTISING & PROMOTION

Year 1: Extensive PromotionTELEVISION:

ON CBC NATIONAL NETWORK: Class AA Time (Prime) 1 Ad @ $4775 for 180 days

ON CBC MID EASTERN REGIONClass B Time (Noon to 6:00pm Weekdays) 1 Ad @ $2303 for 180 days

MAGAZINES: CANADIAN MAGAZINE (NATIONAL EDITION) - HALF PAGE $7960 for 26 Weeks

NEWS PAPER:Toronto star $2.7/line x 15 lines for 26 weeks (once every 2 weeks)

TOTAL - $ 1,482,053

PROGRAM OFADVERTISING & PROMOTION

Year 2 to Year 5TELEVISION: ON CBC MID EASTERN REGION

Class B Time (Noon to 6:00pm Weekdays) 1 Ad @ $2303 for 365 days (Everyday for 4yrs)

TOTAL FOR YEAR 2 TO YEAR 5 $336237

Total Advertising Cost for 5 years plus 10% interest on bank loan (assumed) for 5 years is $7,802,001

ADVERTISING &PROMOTIONAL EXPENSES

Advertising Cost: $7820001Promotional Expense: $15000Special Promotional Material: $25000 Total: $7,842,001

Total No. Of cases Sold : 4.6 Million Cases (ie 55.31 million units)

Advertising and Promotional Expense Per Case : $1.70

SELLING PRICE & TRADE MARGINS

* Cost per case (12 packs of 1 pound each)

Particulars Nestle ($)*MilkMate

($)* Ingredients 7.25 6.16 Packaging 0.75 0.64

Manufacturing 0.5 0.425 Distribution 0.5 0.425

Selling Expenses 0.5 0.5 Advertising &

Promotion1.5 1.70

Total Exp. 11 9.85 Selling Price to

Retailer11.5 11

Profit/Loss 0.5 1.15

PROFITABILITY OVER 5 YEAR PERIOD

Overhead Expenses : 50000x5 = $250,000

Initial Investment : $25,000

Total Expense For 5 Years

Variable Cost : $45,310,000

Fixed Cost : $275,000

Total Cost : $45,585,000

Sales (Units) : 4,600,000

Sales ($) : 4600000x 11 = 50,600,000

Overall Profit : $5,015,000

THANKYOU